Earlier this week the New Jersey Senate Budget and Appropriations Committee passed five separate bills aimed at providing financial relief to Atlantic City and its flailing casino industry.
The bills are not being sold as the cure for Atlantic City, but as a way to provide a measure of stability to the city’s property tax base, trim the city’s debt burden, and give the city the time it needs to hash out a more permanent revitalization plan.
This is just the first stop in the process.
The bills’ next stop will likely be in front of the full Senate (Senate President Steve Sweeney sponsored all of the bills and will likely act on them quickly), and if passed by the NJ Senate they would head to the Assembly for yet another vote. Should both houses pass one or more of the measures, the bills would then land on the desk of Governor Chris Christie for final approval.
The key bill
The cornerstone of the Senate’s Atlantic City revitalization plan is S2572, the “Casino Property Taxation Stabilization Act,” which would scrap the current property tax calculations in favor of a straight $150 million payment over the next two years, followed by 13 years of payments between $75 million and $165 million based on gaming revenue generated.
Atlantic City Mayor Don Guardian said the $150 million is consistent with the current property taxes casinos pay. Therefore, the measure would not only provide long-term consistency to the casinos, but also to home-owners and other businesses in Atlantic City who have seen a dramatic rise in property taxes in recent years.
“It’s stability both for the gaming industry as well as the city,” Guardian told the Press of Atlantic City.
The measure would eliminate uncertainty for casinos when it comes to the city’s ever-increasing property taxes, particular with the closure of four casinos and the 8,000 or so employees that were added to the unemployment rolls this year. This stabilization of property tax payments should also help foster investment and development.
Other bills passed by the committee
S2573, would mandate a “baseline health care and retirement package” for full-time casino employees.
S2574, authorizes supplemental state aid to school districts in municipality with significant decrease in commercial property valuation.
S2575, would redirect between $25 million to $30 million of gambling tax revenue to pay down Atlantic City’s sizable debt.
S2576, would prematurely end the partnership between the Casino Reinvestment Development Authority and the Atlantic City Alliance. This measure would allow even more money to go towards paying down AC’s debt.
Support for the bills varies.
Democrat support was across the board, but Republicans on the Budget and Appropriations Committee balked at several measures, including the mandated health care and pensions (S2573) and increased school funding to districts where property values have significantly decreased (S2574).
Possible lifeline for Taj Mahal
Several of the measures could bailout the Trump Taj Mahal, and save the iconic Atlantic City landmark from following in the footsteps of the Atlantic Club, Showboat, Trump Plaza, and Revel, and closing their doors in 2014.
The Taj is slated to close on December 20th, as Carl Ichan (the Trump Taj Mahal’s main debt holder) said he would only take over and invest in the property if certain financial concessions were made. The measures the Budget and Appropriations Committee passed on Monday might be enough for Ichan to bail the Trump Taj Mahal out by nullifying the debt he is owed (some $276 million) and pumping a further $100 million of his own money into the property.
Of course, this all hinges on the bills passing, and Ichan finding the proposals amenable.
Mayor Don Guardian believes it will. “I do believe the legislation will save the Taj from closing. It’s exactly what the proposed new owner has been asking for,” Guardian said in testimony before the committee on Monday.
However, it also depends on timing, as a Delaware bankruptcy court is scheduled to rule on the Taj Mahal’s fate this week, unless the judge decides to push the hearing back again in lieu of this week’s news.